Understanding 4 to 3 mobile mergers

This report reveals what needs to be done to consolidate the telecommunications market.

Around the world, telecom operators have had difficulty to consolidate the telecommunications market, especially when reducing the number of mobile operators from 4 to 3. Strand Consult has studied this topic for 20 years. Its first report featured South Korea with its 5 to 3 merger in 2000. A lot has happened since then, and Strand Consult has produced “the report of reports” which combines and summarizes all the knowledge about these mergers.

Strand Consult is intrigued why some attempts to create 4 to 3 mobile markets succeed while others fail. Together with leading telecom and competition experts, Strand Consult has collected, analyzed, and distilled this knowledge into practical and actionable steps for operators.  This includes the relevant legal, regulatory, historical, and technological aspects of different countries and markets.

The purpose of the report “Understanding 4 to 3 mobile mergers” is to help operators save time and money. This report does not eliminate the need to hire lawyers to conduct the transaction, but it will help save time and improve communication with key stakeholders wherever they are: the investment community, political/regulatory systems, the media, employees, suppliers, academia, and so on.  This is also the report for the CEO which has never led a 4 to 3 merger, which is most CEOs.

Background to the report: “Understanding 4 to 3 mobile mergers”

In the early days of mobile telephony, governments and regulators endeavored to use spectrum packaging and the granting of operator licenses to engineer industry structures where many operators competed. In 2014, of the thirty-six OECD countries, only 3 (Chile, Israel, and Poland) had more than four nationwide operators. Of the remainder, 19 had 3 operators, and 14 countries had 4. Indeed, the predominant industry trend for the past ten years has been ongoing consolidation.

The question of whether there is a “magic number” of minimum mobile network operators has persisted. The number 4 has acquired some traction, leading to concerns that competition authorities should pay special attention to mergers that reduce the number of operators from 4 to 3.

Regulators and competition authorities have a lot of concerns

Increasingly, it appears that both regulators and competition authorities still have concerns about 4 to 3 mergers. The European Commission has both cleared (e.g. H3G Italy/WIND/JV in 2016) with remedies and prohibited (e.g. H3G/Telefónica UK) 4-3 mergers, although the General Court subsequently annulled the 2016 H3G/Telefónica UK decision in 2020. In 2019-20, the United States Federal Trade Commission (FTC) and Federal Communications Commission (FCC) approved the acquisition of Sprint by T-Mobile, albeit with remedies. Meanwhile, the Australian Competition and Consumer Commission (ACCC) found in 2019 that the country’s three networks were delivering an effectively competitive outcome for consumers, having earlier rejected the application for a potential entrant to merge with the third-largest network operator.

4 to 3 mobile mergers can be derailed by operators telling a story too good to be true

The report also demonstrates how operators have derailed their success by telling a story too good to be true. Some operators do not believe that the facts are enough to convince the authorities that they have a solid case. Strand Consult’s report “Understanding 4 to 3 mobile mergers” highlights examples of winning and losing communication.

The report Understanding 4 to 3 mobile mergers” is a unique report

Strand Consult has combined the existing theoretical and empirical research and put it into a context of specific case studies of 4-to-3 mergers. The report contains well over 150 references to public documents and analyses that make it easier to find additional relevant knowledge in the process.

The report offers a unique and authoritative approach calling upon the extensive academic literature combined with cases. In practice, one cannot talk about the practicalities of a 4 to 3 mergers without looking at the academic and legal angles. Similarly, one cannot look at a 4 to 3 merger from an academic legal point of view without looking at the practicalities.  Strand Consult has done both and we give our customers access to a lot of knowledge when working with these kinds of processes.

Strand Consult’s goal is to lift the level of merger review with quantitative analysis, improve the credibility and transparency of antitrust decisions, and protect agencies from regulatory capture. Companies need to be smarter in their consolidation strategies; antitrust authorities need to improve their toolsets and measurement techniques; and policymakers need to modernize the standard of review.

This report reveals what needs to be done to consolidate the telecommunications market.

To find out more and review the table of contents, contact Strand Consult.

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